It has been a tough year for Micron (MU), as the chipmaker has been heavily affected by adverse macro conditions. Yet, one analyst thinks the current share price could offer new investors an opportunity to get into MU on the cheap.
5-star Rosenblatt analyst Hans Mosesmann rates MU shares a Buy along with a $100 price target. This figure implies a 96% upside from current levels. (To watch Mosesmann’s track record, click here)
Mosesmann has longed banged the drum in Micron’s favor and looking ahead to the company’s August quarter (FQ4) earnings on September 29, Mosesmann implores investors snap up shares of the underperforming large-cap in anticipation of strong upside.
So, what’s behind Mosesmann’s confidence? The analyst explained, “We continue to like Micron on the long-term prospects of 5G smartphones, AI and machine learning applications, and a memory upcycle (2021 expected), where Micron is in one of its best positions to capture this upside.”
Ahead of the print, Mosesmann forecasts sales of $6 billion, a quarter-over-quarter increase of 10.3%, and non-GAAP EPS to hit $1.05, in-line with Micron’s guidance.
The analyst counts “continued strength in data center (cloud and memory) from work-from-home related dynamics, new gaming consoles, and the start of a recovery in the smartphone market (5G) offset by weakness in enterprise” as the quarter’s main drivers.
However, Mosesmann’s confidence is tempered by lower expectations for the following quarter. The analyst sees a “downward bias versus current consensus revenue estimates of down high single-digits q/q,” believing the Street hasn’t fully taken into account the fact the company won’t be able to make any shipments to Huawei – a client thought to make up almost 10% of Micron’s revenue – after September 14, due to the commencement of a U.S. ban on the Chinese telecom giant.
Nevertheless, Mosesmann counters the reduced outlook with the view that “overall bit demand/supply dynamics remain unchanged for a memory upcycle in 2021 driven by accelerated compute shifts, 5G, and WFH dynamics.”
While not quite as bullish, most of Mosesmann’s colleagues agree with his assessment. MU’s Moderate Buy consensus rating is based on 17 Buys, 6 Holds and 1 Sell. With a $62.43 average price target, the analysts expect upside of 22.5% over the coming months. (See MU stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
